Mortgage Recast Calculator

Managing your mortgage effectively can lead to significant savings over time. Our Mortgage Recast Calculator helps you determine how a lump-sum payment toward your principal can reduce your monthly payments without altering your loan term or interest rate.

What Is a Mortgage Recast?

A mortgage recast involves making a substantial lump-sum payment toward your mortgage principal, after which your lender recalculates your monthly payments based on the reduced balance. This process lowers your monthly payments while keeping your existing interest rate and loan term unchanged. It's a cost-effective strategy for homeowners who have acquired extra funds and wish to decrease their monthly financial obligations.

Why Use the Mortgage Recast Calculator?

• Financial Planning: Understand the impact of a lump-sum payment on your monthly mortgage obligations.
• Interest Savings: Estimate potential savings on interest payments over the life of the loan.
• Decision-Making: Determine whether recasting is a suitable option compared to refinancing or making extra payments.
• Convenience: Quickly assess the benefits of recasting without complex calculations.

How to Use the Mortgage Recast Calculator

Follow these steps to estimate your new monthly payments after a mortgage recast:

1. Enter your Current Mortgage Balance (the remaining principal amount).
2. Input your Current Interest Rate (annual percentage rate of your mortgage).
3. Specify the Recast Payment Amount (the lump-sum amount you plan to pay toward the principal).
4. Provide the Years Remaining and Months Remaining on your mortgage term.
5. Click the "Calculate" button to view your new estimated monthly payment.

Understanding Mortgage Recasting

When you recast your mortgage, you make a lump-sum payment toward the principal balance. The lender then recalculates your monthly payments based on the new, lower principal, while the interest rate and loan term remain the same. This results in reduced monthly payments and potential interest savings over time. It's important to note that not all lenders offer mortgage recasting, and eligibility criteria may vary.

Benefits of Mortgage Recasting

• Lower Monthly Payments: Reduce your monthly financial obligations without changing your loan terms.
• Interest Savings: Decrease the total interest paid over the life of the loan due to a lower principal balance.
• No Credit Check Required: Unlike refinancing, recasting typically doesn't require a credit check or extensive documentation.
• Minimal Fees: Recasting usually involves lower fees compared to refinancing, often ranging from $250 to $500.

Considerations Before Recasting

• Lump-Sum Availability: Ensure you have sufficient funds for the lump-sum payment without compromising your financial stability.
• Lender Policies: Confirm with your lender whether they offer recasting and understand any associated fees or requirements.
• Alternative Options: Evaluate other strategies like refinancing, especially if current interest rates are lower than your existing rate.
• Long-Term Goals: Consider how recasting aligns with your financial objectives, such as paying off your mortgage early or reducing monthly expenses.

Frequently Asked Questions (FAQs)

• Does recasting affect my loan term or interest rate? No, recasting keeps your original loan term and interest rate unchanged; it only reduces your monthly payments by lowering the principal balance.
• Is mortgage recasting available for all loan types? No, recasting is typically available for conventional loans. Government-backed loans like FHA, VA, or USDA loans may not offer recasting options.
• How does recasting differ from refinancing? Recasting involves a lump-sum payment to reduce the principal and monthly payments without changing the loan terms, while refinancing replaces your existing mortgage with a new loan, potentially altering the interest rate and loan term.
• Are there any fees associated with recasting? Yes, lenders usually charge a fee for recasting, typically ranging from $250 to $500. It's advisable to check with your lender for specific fee details.

Conclusion

A mortgage recast can be a strategic move to lower your monthly payments and save on interest without the need for refinancing. Our Mortgage Recast Calculator provides a straightforward way to assess the potential benefits based on your financial situation. By understanding how a lump-sum payment impacts your mortgage, you can make informed decisions that align with your financial goals.